How to start investing with small amounts: Is it worth investing 10, 20 or 50 Euros a month?

Investing is worthwhile even with small amounts, as long as your personal finances are in order and the money set aside for investing will not be needed in the near future. You should be aware, though, that in the first year such contributions will not build a large amount of capital. Still, investing regularly helps you form a good financial habit, get to know investment options and start building capital without waiting until a larger sum becomes available.

In short

• You can start investing with as little as 10 euros a month. What matters is choosing an amount that suits you and investing regularly.

• The financial gain from small amounts will not be large at first, but they help you build an investing habit and gradually increase your contributions and accumulated capital.

• Over a longer period, the benefit of the compound interest effect can grow.

• Before investing, it is advisable to build a safety cushion for unexpected situations and pay off expensive debts.

• When choosing an investment, check the minimum amount, access to your money, costs and risks.

How much can you accumulate by investing 10, 20 or 50 euros a month?

Two things need to be separated here: how much capital you will manage to accumulate and what investing teaches you in the long run. You should not expect a large financial result from small contributions at first, but they let you learn how investing works and build good habits without immediately setting aside a large share of your income for investments.

Let's look at what the result could be if 10, 20 or 50 euros is invested every month at a 6% annual return.

Investing for one year:

10 euros a month. A total of 120 euros paid in, with the investment worth about 123 euros at the end of the year.

20 euros a month. A total of 240 euros paid in, with the investment worth about 247 euros.

50 euros a month. A total of 600 euros paid in, with the investment worth about 617 euros.

Investing for five years:

10 euros a month. A total of 600 euros paid in, with the investment worth about 698 euros.

20 euros a month. A total of 1,200 euros paid in, with the investment worth about 1,395 euros.

50 euros a month. A total of 3,000 euros paid in, with the investment worth about 3,489 euros.

These are illustrative calculations before tax and possible fees, assuming the 6% annual return stays the same throughout the period and interest is added once a month. This is not a promise of a guaranteed investment result.

Why is investing regularly more important than a large starting amount?

Investing regularly lets you build capital gradually, without waiting until you have a larger amount of spare money in your account. This way investing becomes a regular item in your budget, just like paying bills or building savings. An automatic monthly transfer from your bank account helps build the habit, and money that reaches the platform can be invested automatically.

To begin with, it is better to choose an amount, even if it is just 10 euros, that you can afford in financially tougher months too, and keep going regularly, rather than realise after a while that you will have to stop what you started well. If your financial situation improves later, you can increase your monthly contribution to 30 or 50 euros.

Do not forget about the compound interest effect either. If investment profit is reinvested, in the future not only the original amount earns but also the reinvested interest. As the previous example shows, this effect becomes more noticeable over a longer period, and it is not an automatic or guaranteed result.

If you want to learn more about the first steps, also read our article on how to start investing. Tips on what to do once a larger amount is available for investing can be found in the article on investing 1,000 euros.

What should you take care of before you start investing?

Before you think about where to invest small amounts, make sure your everyday situation is stable enough. Even small investments should not be made at the expense of your financial security.

One of the basic conditions of financial stability is the so called safety cushion. It is freely accessible savings for unexpected expenses, such as car repairs, health problems or a temporary drop in income. It is advisable to gradually build this reserve to cover at least three to six months of everyday expenses.

The second important aspect is assessing your existing liabilities. If you have credit card debt, a consumer loan or another loan with high interest, then when choosing between paying off a loan and investing, in most cases it will be wiser to pay off the liabilities first.

Where to invest small amounts and what to pay attention to?

Small amounts can be invested in various financial instruments. The choice will depend on your goal, your willingness to take risk, the minimum investment amount and your time horizon.

Before choosing, it is advisable to study the offer carefully and answer the following questions:

Minimum investment amount. Does it match your real ability to pay it in regularly?

Accessibility. How quickly and on what terms can you withdraw the invested money?

Costs. Are there fees for deposits, transactions, account maintenance or withdrawals?

Risk. Do you understand under what circumstances the investment can lose value and how large the loss could be?

One option for those who want to start with a small amount is the flexible investment solution TWINO FLEXI.

The minimum investment amount is 10 euros.

6% fixed annual return, which, however, does not mean this result is guaranteed.

FLEXI funds are automatically invested in asset backed securities, and interest is calculated on the actively invested amount.

FLEXI has no fixed term, and you can request a withdrawal at any time. Withdrawals do, however, depend on the product's liquidity, and in periods of high demand they may take longer.

It is important to understand that FLEXI is not a bank deposit and is not covered by the state deposit guarantee. Like other investments, it involves risk, and it is possible to lose part or all of the amount invested.

Before deciding, read the product terms and risks on the product page, in the FAQ section and in the prospectus and terms.

Frequently asked questions

Isn't 10 euros a month too small an amount for investing?

No. It is a small amount, but it is enough to start building an investing habit and learn how investing works. For example, 10 euros a month at a 6% annual return illustratively grows to about 698 euros in five years.

Can you lose money when investing small amounts?

Yes. Small investments are also exposed to market risk, credit risk and other risks. You may lose part or all of the amount invested.

Can I increase my monthly contribution later?

Yes, on many investment platforms you can change the size of your contributions according to your means and the terms of the specific product.

What is more important: a safety cushion or investments?

It is advisable to first build a safety cushion covering at least three to six months of expenses. That way, in an unexpected situation you will not have to withdraw invested money at an unsuitable moment.

Conclusion

There is no need to wait until you can afford to invest hundreds of euros a month. The most important thing is to start with an amount that suits you and invest thoughtfully. If you are looking for a way to start with a small monthly contribution, take a look at the TWINO FLEXI terms.

Email: [email protected]
Address: Dzirnavu iela 42, Riga, LV-1010, Latvia

This material is for informational purposes and is not individual investment advice.